Relates to applying the Housing Stability and Tenant Protection Act of 2019 to rent calculations and rent records maintenance and destruction for all rent stabilized apartments.
STATE OF NEW YORK
________________________________________________________________________
2943--B
Cal. No. 746
2023-2024 Regular Sessions
IN SENATE
January 26, 2023
___________
Introduced by Sens. KAVANAGH, GIANARIS, KRUEGER -- read twice and
ordered printed, and when printed to be committed to the Committee on
Cities 1 -- committee discharged and said bill committed to the
Committee on Housing, Construction and Community Development --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee -- reported favorably from said commit-
tee, ordered to first and second report, ordered to a third reading,
amended and ordered reprinted, retaining its place in the order of
third reading
AN ACT to apply the Housing Stability and Tenant Protection Act of 2019
to rent calculations and rent records maintenance and destruction
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings. The legislature hereby finds and
2 declares that:
3 (a) the pool of rent regulated apartments in New York state contains
4 an unacceptably high number of apartments in which the current rents are
5 based on prior rents that exceeded the legal regulated rent at the time
6 they were charged, but for which remedies were limited under the law in
7 effect before the effective date of the Housing Stability and Tenant
8 Protection Act of 2019 (HSTPA);
9 (b) it is public policy prospectively to reduce, insofar as possible,
10 those rents to a level in line with what they would have been in the
11 absence of the unlawful rent setting and deregulations that were permit-
12 ted under prior law to go unremedied, and therefore to impose the rent
13 calculation standards of the HSTPA prospectively from the date of its
14 enactment, including in cases where the pre-HSTPA rent has already been
15 established by a court or administrative agency;
16 (c) the purpose of the prospective application of the penalty and
17 record review provisions of the HSTPA is to prevent the perpetual
18 collection of unlawful and inflated rents, and to encourage the volun-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07241-05-3
S. 2943--B 2
1 tary registration of any rent stabilized apartment for which any prior
2 annual registration statement has not been filed, and to encourage the
3 voluntary recalculation of unreliable pre-HSTPA rents;
4 (d) in light of court decisions arising under the HSTPA of 2019,
5 including Regina Metro v. DHCR, it is public policy that the legislature
6 define clearly the prospective reach of that law, and limit, to the
7 extent required by the constitution, the retroactive reach of that law;
8 (e) the New York state division of housing and community renewal
9 (DHCR) misinterpreted the rent stabilization law for a significant peri-
10 od of time with respect to the regulatory obligations arising from the
11 receipt of J-51 and 421-a tax benefits resulting in the unlawful deregu-
12 lation of tens of thousands of rent-stabilized apartments, the setting
13 of unlawful rents, and the collection of millions of dollars of rent
14 overcharges, during a housing emergency. Both landlords and tenants
15 relied upon the DHCR's misinterpretation of the law. In Regina, the
16 Court of Appeals settled many of the issues arising from overcharge
17 claims by tenants who were misled into refraining from filing overcharge
18 cases during the period when DHCR's erroneous interpretation of the law
19 was in effect, but left open the issue of whether a landlord's ongoing
20 collection of overcharges and failure to return apartments to rent-sta-
21 bilization, after the law was clarified, should be treated as fraud;
22 (f) the integrity of the registration system for rent regulated hous-
23 ing has been eroded by the use of base date rents, rather than the
24 service and filing of reliable registration statements, to set rents
25 under the law in effect between the enactment of the Rent Regulation
26 Reform Act of 1997 and the HSTPA. It is therefore public policy to
27 impose, prospectively from the date of the enactment of the HSTPA, a
28 rent calculation formula that, insofar as possible, derives the legal
29 regulated rents for apartments from reliable registration statements
30 served upon tenants and made available to the public; and
31 (g) because pre-HSTPA law with respect to the maintenance by landlords
32 of rent records was complex, and has an ongoing impact upon the calcu-
33 lation of post-HSTPA rents, it is necessary to codify the pre-HSTPA law
34 that applied to the destruction of rent records prior to the enactment
35 of the HSTPA, and to define clearly the impact of such law upon the
36 prospective calculation of rents under the HSTPA.
37 § 2. (a) The legal rent for all rent stabilized apartments for the
38 period from July 1, 2019 and thereafter shall be determined in accord-
39 ance with Part F of the HSTPA. Where the legal regulated rent for a rent
40 stabilized apartment for the period prior to June 14, 2019 has been
41 determined by any court or administrative agency, that determination
42 shall not foreclose a recalculation of the post-HSTPA rent, except that
43 any pre-HSTPA rent that, as of June 14, 2019, is lower than the rent
44 that would be permitted to be charged under the HSTPA, shall be deemed
45 to be the lawful rent under the HSTPA on June 15, 2019, and shall be
46 used as the basis for calculating subsequent rents under the HSTPA;
47 (b) Subdivision (a) of this section shall apply to all cases, includ-
48 ing those pending as of June 14, 2019 before any court, appellate tribu-
49 nal, or administrative agency in which a claim for rent overcharges or
50 rent arrears has been asserted with respect to rent stabilized housing,
51 the legal regulated rent for the period from June 14, 2019 and thereaft-
52 er shall be determined in accordance with Part F of the HSTPA. The
53 legal regulated rent for the portion of any overcharge claim involving
54 rents paid prior to June 14, 2019 shall be determined under pre-HSTPA
55 law, including the default formula in cases of fraud, as codified here-
56 in.
S. 2943--B 3
1 (c) Nothing in this act, or the HSTPA, or prior law, shall be
2 construed as restricting, impeding or diminishing the use of records of
3 any age or type, going back to any date that may be relevant, for
4 purposes of determining the status of any apartment under the rent
5 stabilization law;
6 (d) The legal regulated rent payable for the period prior to June 14,
7 2019 shall be calculated in accordance with the law in effect prior to
8 the HSTPA, including the prior four year limitation on the consideration
9 of rent records, and including the fraud exception to such limitation
10 and such other exceptions as existed under prior law and under the regu-
11 lations of the New York state division of housing and community renewal.
12 Nothing in this act shall be construed as limiting such exceptions or as
13 limiting the application of any equitable doctrine that extends statutes
14 of limitations generally.
15 (e) In accordance with the practice of the New York state division of
16 housing and community renewal prior to June 14, 2019, where fraud is not
17 established, base rents of apartments unlawfully deregulated shall be
18 calculated as the average of rents for comparable rent stabilized apart-
19 ments in the building, rather than the default formula applicable to
20 cases involving fraud;
21 (f) For the period prior to June 14, 2019, neither the version of
22 subdivision g of section 26-516 of the administrative code of the city
23 of New York then in effect, nor the version of section 2523.7 of the
24 rent stabilization code (9 NYCRR 2523.7) then in effect shall be
25 construed as permitting the destruction of rent records for units that
26 have not been properly and timely registered. Where records have been
27 permitted to be destroyed by virtue of proper registration, and no other
28 law required the maintenance of such records, and where the owner has
29 proven that such records were actually destroyed in accordance with
30 prior law and that such destruction took place prior to June 15, 2019,
31 the registration served and filed prior to such lawful destruction of
32 records shall be presumed to be reliable, for purposes of any post-HSTPA
33 calculation of the rent, but that presumption shall be rebuttable. The
34 parties shall be entitled to discovery of any evidence found to be
35 reasonably necessary to demonstrate the legal rent. Nothing in this
36 paragraph shall be interpreted as authorizing the destruction of any
37 record, that under prior law was relevant to establishing (1) the status
38 of an apartment as regulated or unregulated; (2) the presence or absence
39 of fraud with respect to renting any housing accommodation; (3) the
40 presence or absence of willfulness in the collection of overcharges; (4)
41 the useful life of any item, the replacement of which is claimed by the
42 owner to qualify an apartment for a rent increase; (5) the duration of
43 any tenancy, such as would establish whether an owner was entitled under
44 prior law to a longevity increase; or (6) compliance with any law that,
45 independently of the rent stabilization law, required or requires the
46 maintenance of such records. Where the calculation of the rent is
47 dependent upon records that the owner has improperly destroyed, includ-
48 ing where the records were destroyed without the apartment having been
49 registered, the rent shall be calculated in accordance with the default
50 formula.
51 § 3. This act shall take effect immediately.
